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The Wall Street Journal Online: Startups Have Ally in Health System Innovation Chiefs

CHIEF INNOVATION OFFICERS FORGE TIES WITH STARTUPS

By Brian Gormley | November 30, 2016

Startups striving to land health systems as customers have a new friend: the medical system’s chief innovation officer.

Health systems seek technologies to help them improve outcomes, lower costs, and deliver better patient experiences. Thanks to an explosion in medical-related venture investment, they have more choices of emerging products and services than ever. Evaluating them all is a challenge.

Enter the chief innovation officer, a professional tasked with helping the system adopt new technologies. Innovation chiefs, who often come with entrepreneurial experience, are the startup’s ally. They cut through bureaucracy that often stands between the startup and the speedy implementation of a pilot program or partnership.

Medical systems such as Sutter Health in Northern California, Mercy Health in Pennsylvania, and University of Virginia Health System have named their first innovation chiefs recently. Others, such as the University of Pennsylvania Health System, have them as well.

Sutter Health’s interaction with startups has changed with the help of Chris Waugh, who became chief innovation officer last year after gaining entrepreneurial experience at companies such as One Medical Group, a venture-backed provider of primary-care health services.

Typically, health systems interviewing a startup want to know if the technology can serve millions of patients and integrate with the system’s electronic-health records. Startups often can’t reach such high bars right away, Mr. Waugh said, so Sutter asks questions that are more like a venture capitalist’s queries: What problem are you solving? Who is on your team? Can you scale up safely if the model starts to work?

Instead of a few large pilots, Sutter also seeks to form a larger number of small deals in an effort to evaluate more products, Mr. Waugh said. One startup it is working with is Velano Vascular Inc., a provider of needle-free blood-drawing technology. Sutter also backed Velano’s Series A-2 round earlier this year.

Startups still face the challenge of proving their value and converting health-system pilot customers into long-term clients. But the introduction of innovation professionals has made initial interactions with health-care providers easier, according to Velano Chief Executive Eric Stone.

Mr. Stone said he seeks investors and partners who find reasons to do something as opposed to not doing things. “The innovation officer,” he said, “sits at the forefront of that thinking.”